These are stories Report on Business is following Friday, Nov. 21, 2014.
Rich in Canada
The number of people you'd consider very, very rich is on the rise in Canada.
According to an annual report by Wealth-X and UBS AG, the number of ultra-rich people in the world now stands at a record 211,275, with combined net worth just shy of $30-trillion (U.S.).
That, said the study released this week, marks an increase of almost $2-trillion from last year.
"These individuals' influence continues to increase across the globe and across industries: from wealth management to luxury, philanthropy and other domains," the report said.
This group, those with at least $30-million in net assets, represents 0.004 per cent of globe's adult population, though accounts for almost 13 per cent of total wealth.
In Canada, their numbers rose in this year's study to 5,305, and their wealth to $635-billion, from 4,980 people, at $595-billion, a year earlier. Looked at another way, Canada boasts the eighth-biggest wealthy population.
No need to do the math yourself because the authors did it for us, and there's an interesting Canadian angle in it:
The number of ultra-rich in Canada rose 6.5 per cent, while their wealth swelled by 6.7 per cent.
Both were faster than the 6.2 per cent and 6 per cent in the United States. Compared to the rest of the world, at 6 per cent, the number of ultra-rich Canadians also climbed faster, though the increase in wealth was a shade slower than the global rise of 7 per cent.
Among individual cities cited, Toronto is home to 1,840 such people, ahead of Seattle and Atlanta but well behind several big U.S. cities such as New York, San Francisco, Los Angeles, Chicago, Washington and Houston.
The report also cites the importance of Canada's resource economy where those people are concerned.
"Canada's natural resources are particularly important to the country's UHNW population with 35 per cent having made their wealth in either metals and mining or oil, gas and consumables."
At least some can thank the dip in the Canadian dollar, which has helped pump up their wealth "through more competitive pricing of exports."
Almost 75 per cent of those rich Canadians, by the way, are self-made wealthy folks, and 13 per cent inherited their fortunes.
"However, with an average age of 63, Canadian UHNW individuals are the oldest of all focus countries, except for Israel, where the average age is 65," the report said.
"As intergenerational wealth transfers continue, Canada is likely to experience significant changes in the way UHNW wealth is held and managed, with expected growth in the segment of the UHNW population with at least partially inherited wealth."
Canada has the "lowest proportion" of women in that group among all countries, just 320, with on average, $21-million less than their male peers.
Is there hope for the rest of us?
"We predict that in the next five years the size of the global UHNW population will swell to more than 250,000 individuals and their combined net worth will almost surpass US$40-trillion," the report said.
And particularly if you're Canadian: Canada's UHNW population holds US$635-billion in wealth, less than 10 per cent of the country's total wealth. This relatively low proportion is indicative of the continued growth in the wealth of the rest of the population, with indications of a growing mass affluent and HNW market."
- Video: Snottsdale, Canada: What are our snobbiest cities?
- Tavia Grant and Richard Blackwell: Canada's top 1 per cent takes a hit
- Video: I want to be a 1-per-center (but I don't live in Calgary)
RBC shakes up wealth unit
To refocus its wealth management arm, Royal Bank of Canada is parting ways with the division's Caribbean business and has launched a strategic review of its RBC Suisse operation, The Globe and Mail's Tim Kiladze reports today.
The changes will also affect some private banking groups in Canada and the U.S. that have an international focus. However, the number of job cuts has not been finalized because the bank is "considering a number of strategic options for these businesses."
The changes come as Canadian banks struggle to turnaround their struggling Caribbean divisions.
Royal Bank of Canada, Canadian Imperial Bank of Commerce and Bank of Nova Scotia – the three Canadian lenders with sizeable operations in the region – have all suffered writedowns from their Caribbean arms in the past year because the islands are still suffering from a drop in tourism following the global financial crisis.
China cuts rates
Mario Draghi is such a tease. His Chinese counterpart, however, actually ponies up.
Both central bankers, though, juiced the markets today, driving stocks up notably in Europe and North America.
Mr. Draghi, the head of the European Central Bank, has frequently cited the possibility of further stimulus.
He did it again today, in a speech in Frankfurt in which he said the ECB "will do what we must to raise inflation and inflation expectations as fast as possible."
While he has said before that he'll do what he takes, today he "injected a sense of urgency," noted Keng Goh of Royal Bank of Canada.
"Every time Draghi speaks he seems to say the same thing, the central bank stands ready to act, it will consider all unconventional measures, quantitative easing is a possibility," added market analyst Craig Erlam of Alpari in London.
"While this tends to get the markets excited, his comments … were much more dovish."
While Mr. Draghi speaks, Zhou Xiaochuan acts.
The People's Bank of China today surprised markets by cutting its benchmark rate by 40 basis points to 5.6 per cent. A second rate was cut by a quarter of a percentage point to 2.75 per cent.
It was the first such move by the Chinese central bank in more than two years.
"There has been a lot of talk recently about the potential for the PBOC to do more targeted stimulus in order to fight back against the slowing economy, and there were rumours overnight that it may be about to inject a large sum into the financial system, but no one expected a broad based interest rate cut," said Alpari's Mr. Erlam.
- China surprises with interest rate cut to lift sagging economy
- ECB's Draghi throws door to quantitative easing wide open
Canada's annual inflation rate unexpectedly spiked to 2.4 per cent in October, up from 2 per cent in September, as falling fuel prices were outweighed by higher prices across the rest of the major components of the consumer price index, our economics reporter David Parkinson reports.
Prices rose 0.1 per cent month over month, on a seasonally adjusted basis, Statistics Canada said today.
Economists had expected a slight pullback in Canadian prices in the month, as a slump in energy commodities had sent gasoline prices sharply lower. They thought the year-over-year inflation rate would be up slightly, to 2.1 per cent.
The core inflation rate, which excludes the most volatile components of total CPI including energy and many food products, was up 0.2 per cent in the month, and up 2.3 per cent year over year, topping September's rate of 2.1 per cent in September.
"The October CPI report will raise some eyebrows within the BoC," said Laurentian Bank assistant chief economist Sébastien Lavoie, referring to the Bank of Canada.
"Although it is too premature to shift gears and signal hikes, some BoC officials may start to feel less confident about the relatively softer inflationary scenario projected in the October [monetary policy report]."
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